Department of Public Aid
Year Ended June 30, 2005
622 Stratton Office Building
Springfield, Illinois 62706
DEPARTMENT OF PUBLIC AID
YEAR ENDED JUNE 30, 2005
FINDINGS/RECOMMENDATIONS - 8
ACCEPTED - 4
IMPLEMENTED - 4
REPEATED RECOMMENDATIONS - 0
PRIOR AUDIT FINDINGS/RECOMMENDATIONS - 3
This review summarizes the auditors’ reports for the Department of Public Aid for the year
ended June 30, 2005, filed with the Legislative Audit Commission March 28, 2006. The
auditors performed a financial audit and compliance examination in accordance with State
law and Government Auditing Standards. The auditors stated the financial statements
were fairly presented.
The Department of Public Aid, which was officially renamed the Department of Healthcare
and Family Services as of July 1, 2005 (Department) is committed to empowering Illinois’
citizens to lead healthier and more independent lives by providing adequate access to
healthcare coverage at a reasonable cost; assisting families through the child support
process by establishing and enforcing support obligations; and helping people become
more self-sufficient in their home energy needs through energy conservation and bill
In FY05, the average monthly count of enrolled individuals in the medical programs was
1.9 million, including pregnant women, infants, children and teenagers, seniors and people
with disabilities, people struggling with one-time catastrophic medical bills, and children
and adults with chronic health problems. About two-thirds of the medical program budget
is expended for health care to seniors and the disabled, which averaged about 600,000
persons per month.
The Division of Child Support Enforcement serves more than 600,000 families composed
of TANF clients and any other Illinois citizens requesting child support enforcement
services. More than $1.2 billion was collected in child support and arrearages in FY05.
Over 310,000 households received assistance grants through LIHEAP and over 7,000
homes were weatherized in FY05. Finally, the Department’s Inspector General conducted
3,950 fraud prevention investigations and 629 post-payment audits during FY05 and
recovered $17.7 million in overpayments.
The Director of the Department during the audit period was Barry Maram. He has served
as Director since February 26, 2003. He had no prior association with the Department.
The number of employees during the period under review is summarized on the following
Summary of Employees
General Revenue Fund FY05 FY04
Program Administration 325 357
Office of Inspector General 195 205
Attorney General 22 22
Medical 461 473
Managed Care 23 23
Kid Care – Look a Like 44 47
Kid Care - Rebate 39 40
Medi Rev* 9 9
Care Provider for Persons with DD 1 1
Long-Term Care Provider 12 13
Medical Special Purpose Trust 9 9
Child Support Administration 983 997
Public Assistance Recoveries Trust 148 151
Energy Assistance 25 0
Total GRF 1,118 1,176
Other Funds 1,178 1,171
GRAND TOTAL 2,296 2,347
* Medical electronic interchange recipient eligibility verification
Expenditures From Appropriations
The General Assembly appropriated $11,882,716,000 to the Department in FY05. Just
over 50% ($6,030,291,000) of the Department’s appropriated funds are from the General
Revenue Fund. The Department also received appropriations totaling $5,579,425,000
from 25 other funds. Total expenditures from appropriated funds were $10,058,792,000 in
FY05 which represents a decrease of $338,699,000, or 3.3%.
Administrative expenditures from the General Revenue Fund were $128,200,000 and
distributive expenditures from the General Revenue Fund were $4,861,386,000 in FY05.
All distributive expenditures were medical. Appendix A contains a summary of
appropriations and expenditures for the period under review. The Department did not
administer the energy assistance program until FY05. During FY05, the Department spent
an additional $448,380,000 in non-appropriated funds. Lapse period expenditures were
$135.3 million or 1.3%.
Appendix B is a summary of the federal assistance grant awards and disbursements for
FY05. Federal assistance disbursements totaled $6,428,163,000 in FY05. By far, the
largest federal assistance program is the Medical Assistance Program which provides
financial assistance for payments of medical assistance on behalf of cash assistance
recipients, children, pregnant women, and the aged who meet income and resource
requirements and other categorically eligible groups. The federal government pays 50%
of the expenses relating to most administrative costs for Medicaid, but some expenditures
can be matched at 75% or 90%.
Appendix C is a summary of cash receipts for FY05 and FY04. The Department’s cash
receipts and transfers were $12,326,642,000 in FY05, which is an increase of $2.9 billion,
or 30.7%, over FY04. The Hospital Provider Fund is a new fund set up to receive
assessments and disburse monies to qualifying hospitals. FY05 was the first year for DPA
to administer the Energy Administration Fund and the Low Income Home Energy
Assistance Block Grant Fund.
Property and Equipment
Appendix D is a summary of property and equipment for FY05. Property and equipment
for which the Department was accountable was $44,694,000 at June 30, 2005, a
decrease of $4.5 million over FY04.
In FY05 net accounts receivable was almost $292 million, and does not include $2.5 billion
which is the allowance for uncollectible accounts. The accounts are subject to all manner
of collection including internal offsets against future claims for providers with outstanding
debt, Comptroller’s Offset system, cyclical billings, letters and telephone contacts, private
collection agencies, liens and judgments, and notification of credit reporting agencies.
The Department has implemented other methods of collection such as: income
withholding, unemployment insurance benefit intercept, federal income tax refund offset,
professional license revocations, judicial remedies, driver’s license revocation, new hire
reporting, financial institution data match, agency collectors, Department of Revenue
initiative, and referral to the Attorney General’s office.
Follow-up on Previous Audits
As a result of the audit on the KidCare program released in 2002, the OAG made seven
recommendations to the Department. One of the recommendations, regarding the
conversion to a permanent eligibility card, is only partially implemented. Although the
Department plans to issue the cards annually instead of monthly, the Department is still
researching what information should be displayed on the cards and from what materials
the cards should be made.
Accountants’ Findings and Recommendations
Condensed below are the eight findings and recommendations presented in the audit
report. There were no repeated recommendations. The following recommendations are
classified on the basis of updated information provided by Brenda Vost, External Audit
Liaison for the Department of Public Aid, via electronic mail received October 24, 2006.
Accepted or Implemented
1. Follow current procedures and reiterate to supervisors the importance of the
timely completion of all sections of performance appraisals.
Findings: The Department did not complete all performance appraisals on a timely
basis. For nine out of 50 employee files tested, the performance appraisal was signed 39
Accepted or Implemented - continued
to 225 days late. One employee’s prior year’s performance appraisal was not completed
Department personnel indicated the late completion was a result of supervisor oversight.
Updated Response: The Department agrees that all employees are to be evaluated
annually. The Division of Personnel and Administrative Services continues to send
notifications to the Division Administrators and Personnel Liaisons reminding them when
evaluations are due. The Department will not process any personnel transactions (i.e.,
promotions, separations, transfers, etc.), with the exception of address changes, if the
employee’s performance appraisal is past due. Personnel continues to track employee
evaluations in an effort to reduce the number that are not completed and signed in a timely
2. Amend policies to require all employees maintain time sheets in compliance
with State law. Ensure time sheets are completed in accordance with
Department policies and retained by the fiscal office for the required statutory
Finding: The Department is not maintaining time sheets for its employees in
compliance with the State Officials and Employees Ethics Act (Act). The Department had
personnel policies in regard to timekeeping, but the Department only required “Executive
Level Staff” to maintain a daily time sheet which documents the time spent each day on
official State business. The Department had an average of 2,296 employees at June 30,
2005 and the Department only required 14 (0.61%) employees to prepare time sheets in
accordance with the Act.
The auditors selected 6 of the 14 employees required to submit time sheets to determine
whether the time sheets were completed for 3 of the 12 months under audit (July,
November, and April). Two of 18 (11%) time sheets tested could not be located by the
Department, as the employee had failed to complete them.
The Department stated they were ready to implement a department-wide timekeeping
policy to comply with the Act. However, the union demanded to bargain over the impact;
therefore, the policy has been put on hold.
Response: The Department accepts the finding and stands ready to implement a
department-wide timekeeping policy to comply with the Act. However, the union has
demanded to bargain over the impact; therefore, implementation of the policy has been
put on hold. The Department is implementing a policy instructing that a monthly time
sheet reminder be sent to all Executive Level Staff.
Updated Response: Partially Implemented. The Department’s policy that executive
level staff prepare monthly time sheets was implemented. The Department’s hold on
implementation of the Department-wide timekeeping policy continues as the Department
of Central Management Services coordinates implementation efforts.
3. Establish and implement a policy for handling old outstanding checks.
Finding: The State Disbursements Unit (SDU) bank account reconciliation at June 30,
2005 included old outstanding checks. The SDU has embossed on each check “void
after ninety days.” During testing of the SDU bank reconciliation, 9 of 25 (36%)
outstanding checks included in the bank reconciliation were outstanding for more than
ninety days. It was also noted that of the 175,231 checks outstanding at June 30, 2005,
75,165 (42.9%) were more than ninety days outstanding.
The Department stated that their policy is not explicit as to the number of days for SDU
checks to escheat, be voided, and reissued, resulting in some checks being outstanding
more than 90 days.
Updated Response: Implemented. The SDU’s staledate procedures were updated,
the check stock was changed, and computer programming changes for the new
procedures were initiated. In February 2006 the SDU began the EPPICard opt-out
initiative. All eligible custodial parents were enrolled for direct deposit, or in EPPIC, before
the first run on the new staledate procedures. The new procedures enable parents who
had not cashed their checks (because most checks were $5 or under and it was not cost
effective for the parents to cash them) to access their funds electronically. Direct deposit
instructions are provided to any cases enrolled in electronic disbursement after the
staledated check procedures were implemented. For custodial parents who now have
direct deposit or EPPIC and have a staledated check, the SDU can identify the staledated
check, void the payment, and re-issue the payment for direct deposit.
4. Ensure that all interagency agreements are approved by an authorized signer
prior to the effective date of the agreement.
Accepted or Implemented - continued
Findings: The Department failed to sign interagency agreements prior to the effective
date. During testing of interagency agreements, 11 of 30 (37%) agreements were not
signed for approval prior to the effective date. The agreements were signed between 7
and 347 days after the agreements became effective.
The Department stated that oftentimes with interagency agreements a law will pass and
become effective prior to the Department drafting, reviewing, and signing the coordinating
Updated Response: Implemented. The Department has adopted controls to
implement this recommendation through education on the importance of timely processing
and approvals of those who draft the agreements, and with the development of a
database to aid in monitoring the agreements.
5. File reports with the General Assembly within six months of a reorganization
taking effect pursuant to the requirements of the Executive Reorganization
Implementation Act and annually thereafter for three years. Also, file past
due reports promptly.
Finding: The Department has not filed reports with the General Assembly regarding
reorganization as required. The Executive Reorganization Implementation Act requires
“Every agency created or assigned new functions pursuant to a reorganization shall report
to the General Assembly not later than 6 months after the reorganization takes effect and
annually thereafter for 3 years. This report shall include data on the economies affected
by the reorganization and an analysis of the effect of the reorganization on State
government. The report shall also include the agency’s recommendations for further
legislation relating to reorganization.”
Updated Response: Partially implemented. The reports for the
LIHEAP/Weatherization Program and one of the reports for the Circuit
Breaker/Pharmaceutical Program reorganizations were filed with the Illinois General
6. Rescind signature authorization for individuals no longer employed by or
under agreement with the Department, and develop policies to monitor
signature authorizations on file at the Comptroller’s office.
Findings: The Department has not rescinded signature authorization for individuals no
longer employed by or under agreement with the Department. The auditors noted that 8
of 39 (21%) of the signature authority cards on file at the Comptroller’s office were for
individuals who are no longer employed by or under agreement with the Department. The
individuals had not been employed by or under agreement with the Department for
between 49 and 730 days.
Department officials stated that the signature authorizations had not been rescinded due
to employee oversight.
Updated Response: Implemented. The Department has rescinded signature
authorizations for individuals no longer employed by or under agreement with the
Department. The Department's Office of General Counsel receives periodic reports of
changes in employment status for all Department employees, and reviews the report to
determine whether rescission of an individual’s signature authority is warranted. The
Department promptly notifies the Comptroller’s Office when an individual’s signature
authority is rescinded so the card can be removed from the active file.
7. Implement additional controls for the University of Illinois Hospital Services
Fund (Fund 136) to ensure only necessary balances are maintained and
excess funds are timely transferred to Fund 001 as mandated by State
Finding: The Department has inadequate controls to ensure excess funds in the
University of Illinois Hospital Services Fund (Fund 136) are transferred to the General
Revenue Fund (Fund 001).
The Department did not transfer excess monies from Fund 136 to Fund 001 until May. In
May the Department transferred $30.0 million to Fund 001; however, the average daily
balance of Fund 136 from July 1 until the transfer was $42.4 million. Prior to the transfer,
the highest daily balance was $47.6 million and the lowest daily balance was $29.9 million.
In addition, it was noted that two marginal transfers were made prior to May that totaled
$2.2 million. The average daily balance of the fund was approximately $38.2 million for
the fiscal year.
The Department stated that they generally maintained a balance in Fund 136 necessary
for making payments to the University of Illinois Hospital, as well as an estimate of likely
payments for expedited providers, which are paid from other funds. Periodically, excess
funds are transferred to Fund 001 at times of low cash flow, in order to ensure cash
availability for payments to expedited providers, which are paid from other funds.
Updated Response: Implemented. Monthly the Department compares expected
University of Illinois Hospital Services Fund (UIHSF) spending and available cash
balances. The Department transferred $52.2M to the General Revenue Fund (GRF) over
the last six months of FY06 and has requested $29M in FY07 transfers through the end of
September 2006. As a result, the end-of-month UIHSF cash balances have remained
significantly lower than those cited above for the period of February-September 2006.
Accepted or Implemented - concluded
8. Address the compliance requirements provided by State law. If the
Department concludes that the demonstration programs are no longer
needed, the Department should seek legislation to have the mandate
Finding: The Department did not continue the implementation of reimbursement
methodology for demonstration programs or submit an annual report to the Illinois
Department of Public Health (IDPH).
The Alternative Health Care Delivery Act (Act) is intended to foster new innovations in
health care delivery through the development of demonstration projects to license and
study alternative health care delivery systems.
The Act requires the Department to develop and implement a reimbursement methodology
for all facilities participating in the demonstration program. In addition, the Department
shall keep a record of services provided under the demonstration program to recipients of
medical assistance under the Illinois Public Aid Code and shall submit an annual report of
that information to the IDPH.
The Department stated that the reimbursement methodology had been developed but not
implemented due to no apparent provider interest in proceeding with the demonstration
programs. The Department further stated no providers have requested reimbursement;
therefore, there is no data to report to IDPH.
Updated Response: During the last legislative session, the Department requested
that paragraph d-5 of section 30 of the Alternative Health Care Delivery Act be repealed.
That provision was not included in the legislation that was enacted. The Department will
again seek a repeal of that provision.
The Illinois Purchasing Act (30 ILCS 505/1), which was in effect during the two-year period
under review, stated that “the principle of competitive bidding and economical
procurement practices shall be applicable to all purchases and contracts.” The law
recognized that there will be emergency situations when it will be impossible to conduct
bidding. It provided a general exemption for emergencies “involving public health, public
safety, or where immediate expenditure is necessary for repairs to State property in order
to protect against further loss of or damage ... prevent or minimize serious disruption in
State services or to insure the integrity of State records, or to avoid lapsing or loss of
federal or donated funds. The Chief procurement officer may promulgate rules extending
the circumstances by which a purchasing agency may make ‘quick purchases’, including
but not limited to items available at a discount for a limited period of time.”
State agencies were required to file an affidavit with the Auditor General for emergency
procurements that are an exception to the competitive bidding requirements per the Illinois
Purchasing Act. The affidavit was to set forth the circumstance requiring the emergency
purchase. The Commission received quarterly reports of all emergency purchases from
the Office of the Auditor General. The Legislative Audit Commission was directed to
review the purchases and to comment on abuses of the exemption.
During FY05 the Department filed four affidavits for emergency purchases totaling
$630,880.50 as follows:
$249,980.50 for assistance in processing child support orders;
$205,900.00 for fraud prevention at the Office of the Inspector General;
$100,000.00 to negotiate hospital services; and
$75,000.00 for computer software for medical programs.
The State Finance Act requires all State agencies to make semiannual headquarters
reports to the Legislative Audit Commission. Each State agency is required to file reports
of all of its officers and employees for whom official headquarters have been designated at
any location other than that at which their official duties require them to spend the largest
part of their working time. The Department of Public Aid reported in July 2005 that it had
50 employees spending more than 50% of their working time away from their official